New car sales are up 5.01 per cent for the first 10 months of the year compared to the same period last year. According to figures from the Society of the Irish Motor Industry (SIMI), 184,629 new cars were sold to the end of October.
These figures come as the latest European car price survey from Roadtodata Euro Index show Irish car prices have remained relatively static this year, rising by just 0.1 per cent in the third quarter of 2007, compared to an average price increase of 2.1 per cent across Europe.
Prices for petrol models in Ireland actually declined by 0.2 per cent while those for diesels increased by 0.6 per cent. Overall, new car prices in Ireland are 28 per cent higher than in the euro currency zone as a whole, thanks to the Vehicle Registration Tax (VRT) system.
New car sales were down for the month of October compared to October 2006. Last month, 3,849 new cars were sold compared to 4,058 in October of last year, a 5.15 per cent reduction.
It's becoming increasingly apparent that car sales are moving into the first quarter of the year, with fewer sales taking place towards end of year.
The upcoming budget is an important one for the motor industry. It was announced in last year's budget that there would be a change to the VRT system to bring in a CO2 element, but this was expected to be implemented immediately.
However, it was announced last month by the Minster for Finance Brian Cowen that he had agreed to delay the implementation of any changes to the VRT system in the forthcoming budget until the middle of next year.
This followed strong lobbying from the SIMI seeking this delay to allow the industry to plan for the peak buying period at the start of the year.
In June, August, September and October of this year sales were down compared to the same months in 2006.
However, sales were up for each of the first five months of the year indicating that the new car market in Ireland has become increasingly top-heavy.
So far this year, 54 per cent of the total sales this year taking place in the first three months of the year and 82 per cent of this year's total so far sold by the end of June.
It was widely believed that any change to the VRT system before the peak period of January to March would cause huge disruption to the car market.
Any change to the VRT system is likely to alter the buying habits of the general public. Should there be a lower rate of VRT for lower emission vehicles, the price of these cars could reduce, while an increase in the top rate of VRT for higher emission vehicles, as has been proposed, could lead to an increase in the price of such cars.
However, as these changes will now not be implemented until the middle of next year they are not expected to dramatically affect the 2008 market.
The SIMI is this week launching a media campaign to call for no increase in the top rate of VRT, as they believe that this will serve only to incentivise the continued importation of used cars from Britain.
Deputy chief executive of the SIMI, Alan Nolan, commented that "raising VRT is more about collecting taxes than helping the environment.
"EU research indicates that reducing tax encourages the replacement of older vehicles with new ones and this is the environmental step we should take.
"Any suggestion that an increase in VRT will serve to help the environment is just a smoke and mirrors," he said.
More than 54,000 used cars are expected to enter the state this year, with 33 per cent having engine sizes in excess of 1.9-litre and an average age of seven years old.